PE fund-raising picking up tempo

PE fund-raising picking up tempo

Mumbai: India-dedicated private equity funds raised $663 million in the first six months of 2007, a long way from the $16 billion targeted for the full year, according to recent research released by the Emerging Markets Private Equity Association.

The association, which represents 167 private equity firms with more than $400 billion in assets under management, expects at least $12-15 billion to be raised for Asia in the remaining six months of the year and sees India and China accounting for a lion’s share. Out of the $21.7 billion raised in the first half of 2007, Asia, including China and India, accounted for $11.6 billion.

Last year, India alone raked in 15% or $2.88 billion of the $19.4 billion raised for Asia.

Meanwhile, India-related fund-raising, post-June, has received a boost with the $1.25 billion ChrysCapital Investment Advisors-backed ChrysCapital Fund V announced in July. And a slew of $1 billion funds are expected to hit the market by the close of the year, though growth and early-stage deals will dominate investment themes.

Overall, 107 funds focused on emerging markets—Asia, Europe, Latin America, West Asia and Africa—raised $21.5 billion during the period under review. About 162 funds raised $33.2 billion for these markets in all of 2006.

The association does not include Japan, Australia, New Zealand, Pakistan, Afghanistan in its definition of Asia.

“Some of the very large funds being raised are infrastructure sector funds. Only nine out of the 64 funds known to be raising capital for Indian investment are categorized as buyout-focused," said Jennifer Choi, the association’s director of research. Not all the 64 funds are India-dedicated and include pan-Asia funds that have India as a target market.

Some of the large India-focused funds in the pipeline include a $1 billion fund from UK investor Actis Capital Llp., which is expected to close soon. The corpus could not be confirmed.

Mumbai-based Kotak Private Equity Group is in the process of raising a $300 million-plus growth fund, though this one will close next year. In infrastructure, UK’s 3i Group Plc is said to be raising a $1 billion India-dedicated fund and Mumbai-based IL&FS Investment Managers is also raising a $1 billion fund which is likely to be in collaboration with Standard Chartered Private Equity, but this could not be confirmed. There are also a few early-stage, venture funds in the pipeline, but these are most likely to be raised by next year as investors wait for the current crop of raised funds to be deployed.

The mix of limited partne-rs—institutions that invest in private equity funds—investing in India has also changed progressively over the last couple of years. Against a 90% dependence on US limited partn-ers, the current scenario has about 60% coming from the US while the remaining is spilt between Europe and West Asia.